Investors expect insurance enrollment through the Patient Protection and Affordable Care Act (PPACA) exchange program to start slowly, and that could create a buying opportunity with some stocks, according to two Citi analysts who cover the health care industry.
Analysts Gary Taylor and Carl McDonald said in a Sunday research note that investors expect only about 4 million people to sign up for 2014 coverage through the new exchanges, which are supposed to open their doors Oct. 1.
That compares to a projection of 7 million made earlier this year by the Congressional Budget Office.
Medicaid, a state and federal program that covers poor people and disabled people, also will expand in many states.
Taylor and McDonald expect PPACA coverage expansion to help hospital operators like HCA Holdings Inc. and emergency-room staffing companies like Team Health Holdings Inc. the most, and they said they are optimistic that 2014 enrollment will exceed low expectations.
“Accordingly, we’d be aggressive buyers if initial enrollment is disappointing this (fall),” they said.
Conversely, the analysts expect PPACA to have a limited effect on big health insurers.
Shares of HCA rose 2.4 percent, or 98 cents, to $41.27 Monday morning, while Team Health advanced 46 cents, or 1.3 percent, to $37.14. The Standard & Poor’s 500 index also rose less than 1 percent.